Singapore releases regulatory framework for stablecoins

Singapore releases regulatory framework for stablecoins
Image Credit: MAS

To support exchange between fiat and digital asset ecosystems.

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The Monetary Authority of Singapore (MAS) has released a regulatory framework for stablecoins following a public consultation it ran last year.

The features of the new framework apply to single currency stablecoins pegged to the Singapore dollar or any of the G10 currencies where their circulation exceeds S$5 million, MAS said.

Issuers of these stablecoins must fulfil requirements related to value stability, capital, and redemption at par where issuers must return the par value of single-currency stablecoin to holders within five business days from a redemption request, and disclosure to users on audit results of reserve assets.

The regulation also directs issuers to maintain a portfolio of reserve assets "with very low risk".

It mentions the reserve assets to be at least 100 percent of the outstanding single-currency stablecoins that are in circulation.

"They must also maintain a minimum base capital higher than S$1 million or half of annual operating expenses," MAS noted.

Stablecoins are digital payment tokens designed to maintain a constant value against one or more specified fiat currencies.

When well-regulated to preserve such value stability, stablecoins can serve as a trusted medium of exchange to support innovation, including the “on-chain” purchase and sale of digital assets.

Ho Hern Shin, Deputy Managing Director (Financial Supervision), MAS, said the framework will facilitate the use of stablecoins as a credible digital medium of exchange, and as a bridge between the fiat and digital asset ecosystems.

MAS will also hold legislative consultations to bring the framework into force.

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